South Africa's Q2 2024 Economic (GDP) Growth

Key Takeaways from South Africa's Q2 2024 Economic Growth

1. South Africa’s GDP grew by 0.4% in the second quarter of 2024, improving from a revised -0.1% growth in the first quarter.
2. The finance, real estate, and business services sectors were major contributors, growing by 1.3% and adding 0.3 percentage points to GDP growth. The trade, catering, and accommodation industry increased by 1.2%, while the manufacturing sector rose by 1.1%, with significant contributions from motor vehicles, parts, food and beverages, and basic metals. However, the transport, storage, and communication sector and the agriculture, forestry, and fishing sector both declined, detracting from GDP growth.
3. Final household consumption expenditure (HFCE) rose by 1.4%
4. Final consumption expenditure increased by 1.0%, although gross fixed capital formation declined by 1.4%.
5. There was a significant build-up in inventories, with a seasonally adjusted and annualised increase of R9.6 billion.

Economic Growth in South Africa: Q2 2024

GDP growth and sector contributions

South Africa’s gross domestic product (GDP) grew by 0.4% in the second quarter of 2024, an improvement from the stagnant (revised) -0.1% growth in the first quarter. The finance, real estate, and business services sectors were significant contributors, increasing by 1.3% and adding 0.3 percentage points to the overall GDP growth. Specific economic activities like financial intermediation, real estate, and other business services saw increased activity. The trade, catering, and accommodation industry also saw a rise of 1.2%, contributing 0.1 percentage points, reflecting increased activities in wholesale, retail trade, and accommodation.

The manufacturing sector, contributing 1.1%, saw growth in six out of ten divisions, notably in motor vehicles, parts and accessories, food and beverages, and basic metals. The electricity, gas, and water sectors grew by 3.1%, adding another 0.1 percentage points, driven by increases in production and consumption. However, the transport, storage, and communication sector decreased by 2.2%, detracting 0.2 percentage points, mainly due to lower land transport and support services activities. The agriculture, forestry, and fishing sector also declined by 2.1%, contributing negatively by 0.1 percentage points.

Expenditure on GDP

In terms of expenditure, real GDP increased by 0.5% in the second quarter, bouncing back from a 0.1% decrease in the first quarter.

Household final consumption expenditure (HFCE) rose by 1.4%, contributing 0.9 percentage points to overall growth. The highest growth rates within HFCE were observed in services and semi-durable goods categories, especially in expenditures on clothing, footwear, and food and non-alcoholic beverages.

Final consumption expenditure by the government increased by 1.0%, adding 0.2 percentage points, driven by higher purchases of goods and services and employee compensation. However, gross fixed capital formation decreased by 1.4%, subtracting 0.2 percentage points from GDP growth. The decline was primarily due to reductions in other assets, construction works, and machinery, and other equipment.

Trade and inventory impact

Inventories saw a significant build-up with a seasonally adjusted and annualised increase of R9.6 billion. This was driven by substantial contributions from the trade, catering and accommodation, manufacturing, finance, real estate, and business services sectors. However, net exports contributed negatively to GDP expenditure as exports of goods and services decreased by 0.4%, influenced by lower trade in vegetable products, mineral products, and vehicles. In contrast, imports increased by 1.7%, driven by higher trade in vehicles, mineral products, and textiles.

Overall, South Africa's economy exhibited mixed signals with some sectors showing significant growth and others facing declines.